Economic Overview, Riga Commercial Capital & Baltic Tech Hub
Latvia is the central logistics, aviation, and shared service center of the Baltics, offering elite software developers and multilingual talent.
Key Economic Sectors
- FinTech & Shared Services: Leading P2P lending platforms, financial shared service centers, and custom enterprise software in Riga.
- Aviation & Regional Logistics: Baltic aviation hub (airBaltic) and deepwater ice-free ports (Riga, Ventspils, Liepāja).
- Timber & Advanced Materials: High-value engineered wood exports and micro-optics/drone technology.
Employment Contracts, Labour Law (Darba likums) & VID Registration
Regulated by the Latvian Labour Law (Darba likums).
- Mandatory VID Registration: Employers must register every employee with the State Revenue Service (VID) no later than **1 day before work begins**.
- Probation Period: Maximum statutory probation is 3 months.
Working Hours, Overtime Multipliers & Rest Periods
- Standard Hours: 40 hours per week (8 hours/day over 5 days).
- Overtime Surcharges: Minimum 200% (100% premium / double time) of normal hourly wage under Article 68 of the Labour Law (or 50% under compliant collective agreements).
Annual Leave (4 Weeks), Public Holidays & Maternity Protections
- Annual Paid Vacation: Minimum 4 calendar weeks (20 working days) per year of continuous service.
- Public Holidays: ~12 to 14 official national public holidays (including Midsummer / Jāņi on 23–24 June).
- Maternity Leave: 112 calendar days (16 weeks) (56 prenatal + 56 postnatal) paid at 80% via VSAA social security.
- Paternity Leave: 10 working days paid via VSAA.
Social Insurance (VSAOI 23.59% Employer) & VID Income Tax
| Statutory Scheme | Employer Share | Employee Share | Coverage |
|---|---|---|---|
| State Social Insurance (VSAOI) | 23.59% | 10.50% | Pensions, health, disability, maternity & unemployment (34.09% total) |
Personal Income Tax (IIN): Progressive rates: 20% (up to €20,004/yr), 23% (€20,004–€78,100), and 31% on excess, remitted monthly to VID.
Termination, Notice Periods & Severance Pay
- Notice Periods: 1 month standard notice for employer-initiated dismissal.
- Severance Pay: 1 month's salary (tenure < 5 yrs), 2 months (5–10 yrs), 3 months (10–20 yrs), up to 4 months' salary (>= 20 yrs service).
Why Use an Employer of Record (EOR) in Latvia
- Rapid Regional Hiring: Onboard software engineers and financial analysts in Riga in days.
- VID & VSAOI Compliance: Automated management of 23.59% employer social charges and progressive IIN tax withholdings.
- EU Blue Card & Residence Permits: EOR manages Office of Citizenship and Migration Affairs (PMLP) work permits.
